Following landmark elections, Greece formed a new government this week that has promised to abide by the terms of a European bailout designed to keep the country from defaulting on its debt. The bailout has inflicted harsh debt-cutting measures that are keeping Greece in a near-permanent state of recession, and many analysts had feared that Greek voters would rebel by supporting anti-bailout parties that threatened to pull Greece out of the euro (and plunge the global economy into turmoil). Now that cooler heads have prevailed and Greece has averted a euro exit, Athens is reportedly pressing the European Union to ease the bailout terms and give it more time to cut its debt in its own way. Of course, some members of the eurozone, most prominently Germany, appear reluctant to let Greece off the hook. Should Germany cut Greece a break?
Yes. Otherwise, the Greek government won't last long: "The expectation was that if the Greeks voted the 'right' way… the Powers That Be in the eurozone would reward the Greeks by loosening the terms" of the bailout, says Ezra Klein at The Washington Post. Now, if Germany doesn't ease up, the new Greek government will have nothing to hang its hat on, voters will be furious, and the odds that the new government will survive "are infinitesimal." Suddenly, Greece would once again be gripped by chaos, making "it impossible for Greece to remain" in the euro. And remember, its exit could very well "wreck the world economy as the eurozone collapses."
"Is Europe trying to kick Greece out?"
No. The austerity conditions are necessary: The bailout terms seek to reverse the circumstances that brought Greece to this sorry state in the first place, says Josef Joffe at Britain's The Guardian. "Frozen labor markets, lavish welfare benefits, short working lives, bubble-feeding cheap money, and costly sops to public-sector unions" have all contributed to Greece's bloated debt load, and Germany is right to insist on reforms. Only change will save Europe, and if Greece wants aid it will have to show that it's "restructuring by shedding costs and improving productivity."
"Mrs Merkel's Germany is Europe's one musketeer"
And Germany has a right to call the shots: "In this debate, only the Germans really count because they are the ones that are going to stump up the money," says Peter Costello at The Sydney Morning Herald. If German taxpayers have to bear the cost of rescuing Greece, then they have a right to expect their neighbors to "share some of the pain."
"Greece dependent on the patience of German taxpayers"